The Federal Reserve concludes a two-day policy meeting Wednesday, the first with Janet Yellen officially at the helm. The results of the meeting will unfold in two phases. At 2 p.m. EDT, the Fed will release a revised policy statement describing the Fed’s view of economic conditions, its plans for its $65 billion monthly bond-buying program and its expectations for the path of short-term interest rates, which have been set near zero since December 2012. Also at 2 p.m. it will release updated forecasts for growth, inflation, unemployment and interest rates. Then at 2.30 p.m. Fed Chairwoman Yellen will hold her first press conference. Her predecessor, Ben Bernanke, took questions for an hour. We’ll see if she follows suit.

Here is how it is likely to play out:

The Statement

Officials have signaled clearly they are inclined to announce another $10 billion reduction in monthly asset purchases to $55 billion, starting in April. That will show up in the middle of the third paragraph of the policy statement.

The Fed’s descriptions of the economy might include a few tweaks. In January, officials said growth in activity had “picked up in recent quarters.” They’ll need to tone that down a bit, given the bout of soft data released by statistical agencies in the past couple of months. The important question is whether they qualify any toned-down language by pointing to the effects of unseasonable weather, which seems likely. Ms. Yellen said in congressional testimony last month, that “softer spending” may have reflected “in part adverse weather conditions.”

The main action likely will be in the fifth paragraph, where Fed officials describe the outlook for short-term interest rates. The questions they need to answer as clearly as possible are two-fold: 1) How much longer will it be appropriate to keep short-term rates near zero; 2) How will they raise rates once they start?

The Fed has been conditioning the rate outlook on the behavior of unemployment and inflation. In one place in the January statement, it said rates will stay near zero “at least as long” as the jobless rate remains above 6.5% and inflation looks likely to remain below 2.5%. In another place in the statement, the Fed says rates will stay near zero “well past” the point that the jobless rate goes below 6.5%.

Several Fed officials have said they don’t find the jobless rate reference useful now that the rate, at 6.7% in February, is near the 6.5% threshold. While they want to move away from the numerical unemployment threshold, they don’t want to lead investors to think rates are going up sooner than already expected. Futures markets indicate investors expect the first Fed interest rate increases in the second half of 2015. Fed officials could point to persistent slack in the economy, headwinds to growth and low inflation as reasons to keep rates low, and signal they are watching a broad range of indicators in determining the appropriate time for a shift.

“The task for monetary policy will be to provide continued support as long as necessary,” Fed governor Jerome Powell said on March 13.

Fed Chairman Bernanke won unanimous approval from his colleagues for the statement released Jan. 29, after his last policy meeting. He worked hard to maintain consensus at the Fed. Ms. Yellen looks likely to push for continued consensus. But Richard Fisher, the Dallas Fed president, and Charles Plosser, the Philadelphia Fed president, both voting members of the Fed’s policy committee, could be unhappy with new commitments to keep interest rates very low for long, making them possible dissenters. They are in the camp of Fed policy hawks who want to start raising rates sooner than others and might not be comfortable with a policy statement that strongly signals continued low rates.

The Forecasts

Fed policy is forecast-driven. As officials’ expectations for inflation, unemployment and growth shift, they adjust policy to their changing view of the economy. When officials release their updated forecasts Wednesday, the main shifts are likely to be in their projections for unemployment, which looks better than it did a few months ago.

Officials last projected the unemployment rate in December. They expected it to drop to between 6.3% and 6.6% by the fourth quarter of 2014 and to between 5.8% and 6.1% by the fourth quarter of 2015. It has already fallen from 7% during the last forecast round to 6.7% in February. It won’t take much more improvement to get into the Fed’s projected year-end range.

Private analysts have been lowering their unemployment rate forecasts since December. Forecasters surveyed by the Wall Street Journal in December projected a jobless rate of 6.5% by December 2014 and 6% in December 2015. In a Wall Street Journal survey released last week, their forecasts for the unemployment rate had shifted down to 6.2% in 2014 (not far from the Fed’s 2015 projection). They also projected a 5.7% jobless rate in 2015.

It’s not an apples-to-apples comparison, because the Wall Street Journal survey asks for December forecasts and the Fed asks for fourth-quarter forecasts. But the direction of private forecasts has shifted down by 0.3 percentage points in the past three months. If the Fed moves its unemployment projections, it seems likely to move them modestly in the same direction.

Private forecasts for growth and inflation have been stable since December. Those projections imply Fed projections for growth and inflation are likely to be stable in this forecast round, though the Fed’s 2015 growth forecast does look a tad cheerful relative to private expectations.

The Fed’s interest rate forecasts also are of central importance. In December, 12 of 17 officials said they didn’t expect the Fed to start increasing interest rates until 2015. Most saw the benchmark federal funds rate, an overnight rate on loans between banks, at 0.75% or lower by the end of 2015 and at or below 1.75% by the end of 2016, well below the 4% interest rate that officials believe is suitable in normal times.

The Press Conference

This is not only Ms. Yellen’s first meeting as Fed chairwoman but also her first press conference in that role. That will entail an opening statement that gives her an opportunity to frame the Fed’s decision and to answer reporters’ questions.

It’s certainly not her first time in front of reporters. During her many years as San Francisco Fed president, Ms. Yellen often took the time to speak to the press after her speeches. But these were usually low-profile briefings with a handful of specialized journalists –not a nationally-televised affair with global markets parsing her every word. Ms. Yellen’s long-standing experience as a policy maker and desire to make policy more transparent (she testified before the House Financial Services Committee for nearly six hours last month) should make the Q&A informative.

Ms. Yellen will likely face questions on the continued reduction in bond purchases and the recent deterioration in economic conditions; the likely timing and pace of future interest rate increases and the Fed’s framework for deciding on the rate path; pending regulatory issues related to the implementation of the Dodd-Frank financial reform legislation; and the potential impact of the tensions between Russia and Ukraine on the world and U.S. economies.

One issue worth listening for is the U.S. productivity slowdown. Worker output per hour rose just 0.5% in 2013. Other countries, including the U.K., have also experienced productivity slowdowns. If Ms. Yellen believes this productivity slowdown will be sustained, that could mean she sees less slack in the economy and more susceptibility to inflation.

Read our free e-book, “Yellen and the Fed,” a WSJ Briefing. Available for download at www.wsj.com/fed

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